Energy Prospectus

I’m starting to think there is a short squeeze in NG
Someone is getting killed here

Ng up 20 cents to 7.50. lol crk has to pay 5 bucks to settle the swaps!!!
Oxy pxd no settlements as they are unhedged

Just remember that the upstream companies sell all of their gas into the physical market. The large gassers in our Sweet 16 have outstanding marketing departments that should be getting some premium prices for their non-dedicated gas.

Their hedges ("paper trades") are settled in cash with the counter-parties based on index prices.

Dan,

I never really understand what you mean when you respond to Frazer with the answer.

Can you please give me an example I can follow because Frazer makes it sounds like it's a clear loss, and it sure has felt that way in prior quarterly earnings announcements.

Thanks
Scott

I didn’t say loss

I said would you prefer selling your product at 2.50 or 7.50?
I prefer 7.50. The guy that sold at 2.50 will still make money but
less of it

There are two components

Both companies will sell their product at 7.50
But one company will owe the counterparties the difference between 7.5o and the swap price say 2.50 ie -5.00 bucks so

The unhedged one keeps the whole thing ie 7.50
The hedged one nets 2.50.

A few years ago prices were lousy and the hedged companies did “better” than the unhedged ones
Given that I’m bullish on oil and ng prices , I want maximum exposure to upside
That’s more risky if prices crash to a buck. The hedged one won’t get less than 2.50

If fundamentals change and we are flooded with oil and prices crash I will sell everything